Switching to a Blue-Form Return: What to File, and By When

Thinking about it in November: what you can still make, and what you can't

As the year-end comes into view, more people start saying "next year I'll switch to blue-form." Here is the short answer: if you want a blue-form return (aoiro shinkoku) from the 2027 tax year, you are on time as long as you file the Application for Approval of Blue-Form Return (aoiro shinkoku shonin shinseisho) with your tax office by Monday, March 15, 2027. What you generally cannot do now is switch the 2026 tax year of an activity you are already running to blue-form.

The other thing worth knowing right now is a change to the deduction amounts. Under the FY2026 (Reiwa 8) tax reform, the tiers of the special blue-form deduction change from the 2027 tax year. File on paper and the cap is ¥100,000; file via e-Tax and it is ¥650,000; set up electronic storage of your books as well and it is ¥750,000. If you switch next year, your very first blue-form year will run under the new rules.

The annual tax return (kakutei shinkoku) process as a whole, including the ¥200,000 rule, the basic deduction and converting dollar commissions to yen, is covered in our FX affiliate tax return guide. This piece sticks to one thing: the steps for switching to blue-form.

The starting point: miscellaneous income does not become blue-form

Blue-form filing is available to people with business income, real estate income or timber income. If your affiliate commissions are classed as miscellaneous income (zatsu shotoku), you cannot use the special blue-form deduction even if you file the approval application. So the first thing to check is not how to fill in the form, but whether your commissions can be called business income (jigyo shotoku).

The rule of thumb comes from the note to Basic Income Tax Circular 35-2, revised in October 2022. In our own words, the key points are:

• Whether income is business income or miscellaneous income depends on whether the activity is large enough to be called a "business" by ordinary social standards
• If you have not kept books and records of your transactions, the income is, as a rule, miscellaneous income from that work
• The exception is when revenue exceeds ¥3,000,000 and there are facts showing it is business income

Put the other way round: a side hustle with revenue of ¥3,000,000 or less and no books is almost certain to be treated as miscellaneous income. Equally, having books does not automatically make it business income. What counts is the substance, such as whether the income is ongoing and how much time and effort you put in.

Two forms to file, with separate deadlines

To switch to blue-form, there are basically two forms to file with your tax office. Both can be filed via e-Tax.

If you plan to pay a salary to a family member, you also need a separate Notification of Salaries for Family Employees under Blue-Form (aoiro jigyo senjusha kyuyo ni kansuru todokedesho). Most people do not use it at the side-hustle stage, so we will just mention the name here.

What happens to this year (the 2026 tax year)

You can file blue-form for 2026 only if you filed the approval application by March 15, 2026, or if you newly started a business on or after January 16, 2026 and filed within two months of that date. Everyone else files a white-form return (shiroiro shinkoku) for 2026.

Where it gets tricky is "starting a business now." For example, if you newly started a business in November 2026, filing the approval application within two months of the start date would bring 2026 into blue-form. But whether an activity you have been running as miscellaneous income can be said to have "become a business in November" depends on the facts. The date on a form does not settle it. Talk to your tax office before you act on this.

Even with a white-form return, people with business income are required to keep books and retain their records. If you are filing white-form for 2026, keep your commission payment records and expense receipts rather than throwing them away.

The deduction changes from the 2027 tax year

The biggest benefit of blue-form filing is the special blue-form deduction (aoiro shinkoku tokubetsu kojo). The FY2026 (Reiwa 8) tax reform revises it, and the change applies to income tax from the 2027 tax year (the return you file in 2028) onward. For individual inhabitant tax, it applies from 2028 onward.

In short, file on paper and a deduction that used to be ¥550,000 falls to ¥100,000 from the 2027 tax year. Most people running affiliate marketing as a side hustle can keep ¥650,000 simply by filing via e-Tax. Whether to go for ¥750,000 comes down to whether your accounting software supports the requirements. The NTA plans to rename the related notification forms around March 2027, so check the detailed requirements against its future guidance.

Also note that the deduction is capped at the amount of your business income and similar. In a year with ¥400,000 of income, you cannot deduct ¥750,000.

Bookkeeping starts with the January 1 transactions

A deduction of ¥650,000 or more requires that you record every transaction of the year in double-entry books. If you are switching from the 2027 tax year, you need books from the transactions of January 1. You can enter everything in one go later, but overseas affiliate income comes with some extra work of its own.

• Converting dollar commissions to yen: pick one conversion rule and convert to yen the same way every time. The approach is explained in our tax return guide
• Transfer and payment fees: record the gap between the commission amount and what actually reaches your account as fees
• Home rent and phone/internet costs: decide the share used for the business and apportion. How to keep the evidence is covered in our article on apportioning home-office expenses
• Invoices: blue-form filing and invoice registration are separate procedures, and you can file blue-form while remaining a tax-exempt business (Japan's invoice system and affiliate commissions)

Save screenshots of your Kingfin commission screen and your transfer and deposit statements month by month, and reconciling at year-end goes quickly. If you consider the "electronic data storage" route to ¥750,000, having the original data in order is the starting point too.

Your timeline to March 15, 2027

1. November–December: check whether your commissions can be called business income. If unsure, talk to your tax office
2. During December: choose your accounting software. Check whether it supports e-Tax and the electronic book storage requirements
3. From January 1, 2027: start double-entry bookkeeping
4. During January: file the business-start notice (if you have not yet) and the Application for Approval of Blue-Form Return via e-Tax
5. February 16 – March 15: complete your 2026 tax return. The approval application is also due on March 15
6. February–March 2028: file your 2027 tax year return as blue-form via e-Tax

Checklist before you switch

• Is there real substance for your commissions to count as business income (books, continuity, time spent)?
• Have you filed a business-start notice? If not, file it together with the approval application
• Have you filed the Application for Approval of Blue-Form Return by March 15, 2027?
• Do you have accounting software that lets you keep double-entry books from January 1?
• Are you set up to file via e-Tax (My Number Card and so on)?
• Are you saving commission statements, transfer records and receipts month by month?

Author

Hiro Hiraki

Editor-in-chief, Kingfin JP. An FX affiliate specialist with 15+ years in financial and FinTech translation. Trilingual in Japanese, English and Thai.